Correlation Between COG Financial and Ampol

Can any of the company-specific risk be diversified away by investing in both COG Financial and Ampol at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining COG Financial and Ampol into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COG Financial Services and Ampol, you can compare the effects of market volatilities on COG Financial and Ampol and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in COG Financial with a short position of Ampol. Check out your portfolio center. Please also check ongoing floating volatility patterns of COG Financial and Ampol.

Diversification Opportunities for COG Financial and Ampol

0.39

Correlation Coefficient

COG Financial  Ampol

Weak diversification

The 3 months correlation between COG and Ampol is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding COG Financial Services and Ampol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampol and COG Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on COG Financial Services are associated (or correlated) with Ampol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampol has no effect on the direction of COG Financial i.e., COG Financial and Ampol go up and down completely randomly.

Pair Corralation between COG Financial and Ampol

Assuming the 90 days trading horizon COG Financial Services is expected to under-perform the Ampol. In addition to that, COG Financial is 1.75 times more volatile than Ampol. It trades about -0.02 of its total potential returns per unit of risk. Ampol is currently generating about 0.02 per unit of volatility. If you would invest  2,649  in Ampol on October 23, 2024 and sell it today you would earn a total of  306.00  from holding Ampol or generate 11.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

COG Financial Services  vs.  Ampol

COG Financial Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COG Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Ampol

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ampol are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Ampol may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with COG Financial and Ampol

The main advantage of trading using opposite COG Financial and Ampol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COG Financial position performs unexpectedly, Ampol can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ampol will offset losses from the drop in Ampol's long position.

The idea behind COG Financial Services and Ampol pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.